Processing and Distribution of Locally Sourced Fruits and Related Products
Processing and Distribution of Locally Sourced Fruits and Related Products
Business Model Description
Establish or scale up business to business (B2B) and business to consumer (B2C) businesses engaged in the processing of fruits such as dates, citruses, mangoes and apples that are packaged and distributed in both domestic and international markets.
Tamre Panjgur: Dates of Panjgur is a premium dates brand, 100 per cent organically produced in Balochistan-Punjgur. UAE Pakistan Assistance Programme (PAP) invested USD 6.36 million to build a dates processing factory. It has been formed as a part of a project by PAP to strengthen the livelihoods and create in Balochistan. The plant started commercial production in April 2022 (13)
Expected Impact
Positive impact on people of the area; provide jobs and add value to local resource, reduce the water stress on country's irrigation system.
How is this information gathered?
Investment opportunities with potential to contribute to sustainable development are based on country-level SDG Investor Maps.
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Country & Regions
- Pakistan: Balochistan
- Pakistan: Sindh
- Pakistan: Khyber Pakhtunkhwa
- Pakistan: Punjab
Sector Classification
Food and Beverage
Agriculture contributes 22.7 per cent of the GDP and employs 37.4 per cent of the population, with 65 to 70 per cent population depending on the sector for their livelihood. (1) Due to the 2022 floods, this sector was second most affected, with damages amounting to USD 3.7 Billion. Most of the damage under the crop sub-sector was registered in Sindh which experienced a loss of 76 per cent of its total crops followed by Balochistan at 22 per cent. (2)
Policy Priorities
The Government of Pakistan (GOP) introduced the National Agricultural Transformational Plan and National Food Security Policy (2018), which fall in line with the current priorities of ensuring food security as Pakistan is ranked 75th out of 113 on the food security index and its level of hunger is "serious" on the global hunger index (3) (4) (5).
Gender inequalities and marginalization issues
Despite active participation in the agricultural sector, women have less access to assets, services and opportunities compared to men. This gender gap relates to limited access to inputs, services, land ownership, livestock, technology, education, and financial services. Better understanding in these areas will promote gender considerations. (6)
Investment opportunity's introduction
Pakistan's population is 229 million, 61 per cent of it between the age of 15-64 years and 35 per cent belonging to the middle-income class. Thus, there is a growing need for investment in business models accessible, affordable and nutritious food across the country. (7) In 2020-2021, ~USD 54 million worth of investment was made in the agriculture sector. (8)
Key bottleneck's introduction
According to Federal Chambers of Commerce and Industry, lack of value addition, price fluctuations, supply chain issues, energy tariffs and insufficient storage capacity are some of the major challenges for development of food and beverage sector. (9)
Food and Agriculture
Due to 2022 floods, agriculture has been second most hit sector by damages USD 3.7 Billion (2). Food Processing allows value addition to Agricultural Products. Sub-sector also ensures nutritious, safe and accessible options. With Pakistan having world's highest birth rates (22 births per 1000 people.), food security is even a bigger challenge to Pakistan (4) (5).
Policy Priorities
As per the national investment agency, Board of Investment, food processing is one of the top ten sectors for investment and is supported by National Food Security Policy (NFSP) which promotes the uptake of balanced food and aims to promote sustainable agriculture in Pakistan. (10)
Gender inequalities and marginalization issues
As of 2022, this sector employs 65 percent of the women labor force. (11) Women, traditionally in Pakistan, have not had access to upstream opportunities in agriculture sector. Food and beverage sub-sector give women an opportunity to link their agriculture produce to processing units.
Investment opportunity's introduction
Food and beverage processing industry is the 2nd largest industry in Pakistan after textiles, accounting for 27 percent of value-added production and 16 percent of employment in the manufacturing sector. There are many investment opportunities in areas such as agricultural food, edible oils and fats, frozen food, meat and poultry. (12)
Key bottleneck's introduction
These include weak contract enforcement for contract farming, poor on-farm sanitary and phytosanitary standards (SPS) enforcement, inadequate post-harvest infrastructure for packing, handling and transportation, lack of protocols for certifications of health and safety standards, and unassured supply of raw material to processors. (13)
Processed Foods
Pipeline Opportunity
Processing and Distribution of Locally Sourced Fruits and Related Products
Establish or scale up business to business (B2B) and business to consumer (B2C) businesses engaged in the processing of fruits such as dates, citruses, mangoes and apples that are packaged and distributed in both domestic and international markets.
Tamre Panjgur: Dates of Panjgur is a premium dates brand, 100 per cent organically produced in Balochistan-Punjgur. UAE Pakistan Assistance Programme (PAP) invested USD 6.36 million to build a dates processing factory. It has been formed as a part of a project by PAP to strengthen the livelihoods and create in Balochistan. The plant started commercial production in April 2022 (13)
Business Case
Market Size and Environment
> USD 1 billion
5% - 10%
Annual date production in Pakistan is estimated at between 550,000 - 650,000 metric tonnes. (16)
During 2022, USD 8.7 billion revenue was generated by sale of fruit and nut items in the food sector. Revenue is estimated to increase to USD 12.06 billion in 2027. (14) Pakistan's fruit and vegetable industry grew at CAGR of 5.9 percent during 2022-2027. (15)
Indicative Return
20% - 25%
20% - 25%
20% - 25%
As per experts, date processing businesses have good returns specifically when sourced through the local market and sold in local and export markets. Small and Medium Enterprise Development Authority's (SMEDA) Pre-feasibility on date processing units, quotes Return on Investment in the range of 20-25 percent in Pakistan. (17)
Investment Timeframe
Medium Term (5–10 years)
SMEDA's pre-feasibility study for local and foreign investors suggests that it will take 5.2 years for the business to start generating projected revenues. (17)
Ticket Size
< USD 500,000
Market Risks & Scale Obstacles
Business - Supply Chain Constraints
Business - Supply Chain Constraints
Impact Case
Sustainable Development Need
Despite Pakistan being a surplus food producer and 36.9 percent of the population suffers food insecurity due to inflation, locust infestations, flash floods, drought and reduced income due to COVID-19 restrictions. (19) The IOA can provide employment and nutritious food option.
Small scale farmers in Pakistan can focus on high yielding crops that will increase their productivity as well as income, as these farmers can supply their produce as inputs for fruit processing companies.
Climate change is a challenge for agricultural sector in Pakistan as temperature and precipitation patterns impact agriculture. Greenhouse gases (GHG) generated during agricultural processes also play an adverse role. There is a need to adapt to climate smart strategies to ensure food security. (20)
Gender & Marginalisation
Women have traditionally worked in seed plantations, fruit picking and processing activities; thus working in both farms and units. To eliminate gender gaps in income and employment, it is imperative to ensure equal wages for both women and men, thereby catering to gender specific needs. (6)
Women in Pakistan work for 15.5 hours per day, of which 5.5 hours are spent caring for livestock. Their contribution to the agriculture sector (home-based livestock rearing and vegetable farming) is devalued as that of extension workers, and often limited to support work. (21)(22)
Almost 4 billion acres of agriculture land was damaged during 2022 floods. Sindh and Balochistan have been significantly impacted by floods as 72 percent and 21 percent of damage to agriculture occurred in these regions, respectively (2)
Expected Development Outcome
Using processing methods like freezing can reduce post-harvest losses in agriculture (account for ~35-40 percent of total production as of 2021) which occur due to mishandling of perishable products, poor transportation, and inadequate storage facilities and market infrastructure. (23)
Fruit processing can help create jobs for people along value chain - farmers who cultivate, pickers of fruits and vegetables, processing facility workers (including women who hold managerial positions as well as workers in small farms). Agriculture employs 37 percent of the total workforce (2020).
Improving farm-to-market access of products, along with ensuring that farmers earn the right price for their produce, thereby reducing their losses and improving income levels.
Gender & Marginalisation
Investment in the fruit processing also has a spillover effect on other allied industries as well therefore impacting employment of women in industry as well which was 17 percent in 2019 (24) Furthermore, improvement in agriculture yield results in better outcomes for females as 65 percent of the female workforce is directly or indirectly employed in "agriculture" sector. (25)
Primary SDGs addressed
2.1.1 Prevalence of undernourishment
2.1.2 Prevalence of moderate or severe food insecurity in the population, based on the Food Insecurity Experience Scale (FIES)
As a percentage of country's population, in 2020, Prevalence of undernourishment was 17 percent. (26)
The prevalence of moderate or severe food insecurity in the population increased by 0.46 percent for one year period from 2018-19 to 2019-20. In 2020, the percentage of severe or moderate food insecure population was 32. percent. (26)
The voluntary national review attributes the improvement in the progress on Goal 2 by the decrease in percentage points of undernourishment, but the Vision 2025 does not give any specific target.
Reduce food insecure population from 60 percent to 30 percent as per Vision 2025 from Ministry of Planning. (27)
12.3.1 (a) Food loss index and (b) food waste index
In Pakistan, postharvest losses in agriculture (account for ~35-40 percent of total production as of 2021) which occur due to mishandling of perishable products, poor transportation, and inadequate storage facilities and market infrastructure. This adds to country's food insecurity. (23)
Reduce food insecure population from 60 percent to 30 percent as per Vision 2025 (27)
5.5.2 Proportion of women in managerial positions
The percentage of women in managerial positions has increased from 2.70 percent (2014) to 4.53 percent in 2019. (27)
The National Vision 2025 by Government sets the target of increasing women labor force participation from 24 to 45 percent by 2025 but does not give a specific target of increasing their presence in managerial positions. (27)
Secondary SDGs addressed
Directly impacted stakeholders
People
Gender inequality and/or marginalization
Planet
Corporates
Public sector
Indirectly impacted stakeholders
People
Gender inequality and/or marginalization
Planet
Corporates
Public sector
Outcome Risks
Post-date processing waste may or may not be disposed-off properly: IOA, in its effort to reduce fruit being wasted, has to also adhere to industrial waste disposal/ management guidelines. Additionally, equal income distribution, fair prices for farmers and sustainable agriculture may not be practiced due to current cultural practices and limited information on good practices.
Without prescribed standards, role of women may be limited as that of "invisible workers", thereby not gaining recognition as agricultural workers to fulfil the employment gap.
Impact Risks
The business model requires a long-term presence as due to floods 2022 the business model supports improving livelihoods and job creation that is needed for recovery and reconstruction. Also, there is a risk of unavailability or uptake of formal means of credit to farmers for cultivation of relevant crops due to difficult documentation or lack of information on available channels.
Gender inequality and/or marginalization risk: Risk may also be due to non-economic challenges, including unsafe working environment or repeated physical activities and health problems (28).
Impact Classification
What
increased access to quality products for 35 percent middle class in Pakistan along with improved facilities for storage and processing of produce to reduce port-harvest losses.
Risk
Price fluctuations along the value chain raise risk for food manufacturers, thereby hampering their ability to compete internationally. (28)
Contribution
The IOA will contribute to the recovery and reconstruction needs of USD 3976 million in the agriculture sector.
Impact Thesis
Positive impact on people of the area; provide jobs and add value to local resource, reduce the water stress on country's irrigation system.
Enabling Environment
Policy Environment
Agricultural Transformation Plan: The plan proposes enhancing farm productivity, improving post-harvest management, export performance to improve export-production ratio, value chain management, processing of agriculture commodities as cottage industry & improve inefficient farm operations. (3)
National Food Security Policy: the goals of the policy are to alleviate poverty, eradicate hunger and malnutrition; promote Sustainable food production systems by achieving an average growth rate of 4% per annum; make agriculture more productive, profitable, climate resilient and competitive. (3)
Processed Food and Beverages Export Strategy 2023-2027 outlines path for the development of the processed food and beverages industry in Pakistan. Strategy defines concrete opportunities that can be realized through steps detailed in its plan of action (29)
Strategic Trade Policy Framework 2020-2025: The policy framework states the incentives and interventions for "developmental priority sectors" for export. These sectors are processed foods and beverage, fruits and vegetables, meat, poultry and seafood. (30)
Financial Environment
Financial incentives: Refinance Scheme for Working Capital Financing of Small Enterprises and Low-End Medium Enterprises in date processing among others. the scheme has maximum financing limit of Maximum financing limit USD 175,000. (7)
Fiscal incentives: 1. Low custom duties on capital goods used for handling, processing and storage of Vegetables, Fruits, Food items etc. 2. Low rates of customs duty on import of capital goods used by Food Processing Industry. 0% customs duty on capital goods for setting up Fruit Processing in specific areas. (31)
For special economic zone: Exemption from income tax for ten years and One time exemption from all custom-duties and taxes on import of capital goods to Developers, Co-developers and Enterprises (32)
Regulatory Environment
Pakistan Standards and Quality Control Act 1966: After the amendments, food standards are now harmonized across the country. Punjab, Sindh, KPK and Balochistan Food Authority Act govern food processing and food sector by sections on Licensing of business, Improvement notice, Prohibition orders, False labelling, Failure to comply with the directions, Unhygienic or unsanitary conditions and more.
Marketplace Participants
Private Sector
Companies and date processing units, distributors, logistics support: Punjgur Co., Fine Food Dates, GNS Pakistan Dates, Asia Foods International and Gilano Dates.
Government
Ministry of Commerce, Trade Development Authority of Pakistan and Provincial Commerce and Industries, and Food Departments
Multilaterals
UAE Pakistan Assistance Programme , World Bank, World Food Programme, United Nations Development Programme, Food and Agriculture Organization, UKAID and International Trade Centre
Non-Profit
Overseas Investor Chambers of Commerce and Industry (OICCI), Federation of Pakistan and Provincial Chambers, Agro Food Processing (AFP) Facilities Multan.
Target Locations
Pakistan: Balochistan
Pakistan: Sindh
Pakistan: Khyber Pakhtunkhwa
Pakistan: Punjab
References
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